Uncategorized DOCUMENTARY COLLECTION WITHOUT INSTRUCTIONS By Mr Old Man Posted on May 8, 2011 5 min read 19 0 4,214 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION FROM THUY Dear Mr Duc, My name’s Thuy from Vietnam International Bank. I would like to seek your advise for my issue related to documentary collection as follows: We received 01 D/P collection docs which is forwarded by ABC bank in Vietnam. The enclosed covering letter showing that “ABC bank is receiver of docs and DEF bank in Germany is Remitting bank”. Besides, there is no instructions from ABC bank. On the next day, we received an MT499 from ABC bank, which showing that: “ Pls be advised that we forwarded the original documents to you as per instructions of DEF bank, germany under their MT999 dd 110415. The documents sent by Vexpress courier waybill no.01258 on 110416. Pls contact with DEF bank for further instructions” The drawee would like to pick up the docs, but we couldn’t release the docs against payment because we still haven’t received any instructions from DEF bank or ABC bank. ABC bank only forwarded the docs to us as per instructions of DEF bank and gave us no instructions to process the docs. Therefore, we contacted to DEF bank to get their instructions before releasing the docs to the drawee. According URC522, is our action right? Could we release the docs right after receiving MT499 from ABC bank without getting instructions from DEF bank? Is there any risk which we may bear if we do that? It would be appreciated if you could reply me ASAP. Thanks in advance. Best regards,Thuy—————————— ANSWER Dear Thuy, Thank you for your question. It is uncommon for a collecting bank to receive a documentary collection without collection instructions. According to URC 522 sub-article 4 (i), all documents sent for collection must be accompanied by a collection instruction. In absence of collection instruction from the remitting bank, the collecting bank is not obliged to but may seek clarification from the remitting bank or from the principal in the absence of the remitting bank. Your bank is advised not to release the documents to the drawee until receipt of the remitting bank’s collection instructions. However, that’s just theory. It may be different in practice. For your information (but not encouraged), where the goods arrive before the documentary collection, we sometimes issue shipping guarantees, at our customer’s request, to enable them to take delivery of the goods without presentation of the transport documents. Obviously, it is riskier than the case where the documentary collection contains no collection instructions. Luckily, we have had no problems so far. So, if insisted by the drawee, your bank may at your own discretion decide whether to release the documents to the drawee or not. If your bank agrees to release, it should agree to release against payment and against the drawee’s undertaking to indemnify the bank against any claim from the remitting bank arising out of this release. Good luck. Best regards,Mr. Old Man
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
CAN THE ISUING BANK CITE “LATE PRESENTATION” AS A DISCREPANCY SOLELY BASED ON THE DATE OF THE COVER LETTER?